Monthly World EnergyMarket Review

Release Date: December 7, 2018

International Pricing Information

US Current price M/M (%) Y/Y (%)

Power (MWh)

Avg. price ind users $67.9 +1.50 % - 2.90 %

PJM region weekday $64.20 + 74.50 % + 66.90 %

Palo Verde weekday $30.38 - 5.10 % + 18.00 %

Natural Gas (Dth) per Dth.

Henry Hub $4.339 + 22.10 % + 48.50 %

WTI (US$/bbl)C: $53.34

M/M: - 13.40 %Y/Y: - 5.00 %

Venezuela Oil Basket(US$/bbl)C: $60.64

M/M - 14.10 %Y/Y - 0.1 %

Brazil CEPEA Hydrous Ethanol (US$/l)

C: $0.4195M/M: - 10.30 %Y/Y: - 20.50 %

Europe Current price M/M (%) Y/Y (%)

Baseload Power (MWh) – Month Ahead

Germany € 59.21 - 0.50 % + 60.60 %

France € 59.63 - 1.50 % - 32.50 %

Spain € 64.23 + 3.80 % + 3.10 %

Swiss € 62.16 + 2.90 % - 29.20 %

UK £ 64.00 + 2.60 % + 11.90 %

Italy € 72.79 + 10.50 % + 21.20 %

Natural Gas (MWh)

NL (TTF) € 24.43 -1.30 % + 15.80 %

UK (NBP) £ 21.63 - 5.70 % + 6.60 %

Rotterdam Coal (US$/t)

C: $85.60M/M: - 7.50 %Y/Y: - 7.10 %

Singapore Fuel Oil (US$/ Ton)C: $393.00

M/M: -17.50%Y/Y: + 10.50 %

Japan LNG(US$/ Dth.)C: $ 9.805

M/M -13.20 %Y/Y: + 26.50 %

Australia Current price M/M (%) Y/Y (%)

Baseload Power (MWh)

Queensland $76.26 - 3.7 % - 3.30 %

Global Energy Review – International Markets

• Nordic forward power prices fell slightly on Wednesday on lower coal and carbon rates and on forecasts for milder weather in

the hydropower-dependent region. The fuel complex is down and in addition the weather forecasts are milder.

• Norwegian aluminium producer Norsk Hydro is considering a cross-border power purchase agreement for its aluminium

smelter in Slovakia, the company’s senior vice president Tor-Ove Horstad informed. Norsk Hydro’s smelter is located in Žiar

nad Hronom, about 170km east of Bratislava, and equally close to the Czech Republic, Poland and Hungary. PPAs are

interesting to firms wishing to secure long-terms deals in renewable energy. Norsk Hydro signed the world’s “longest wind

power deal” to 2050 from a planned wind farm in Sweden earlier this year with Green Investment Group, a subsidiary of

Macquarie, to supply its aluminium plants in Norway. The firm signed an eight-year long-term agreement with Slovenske

Elektrane in 2013 for its part-owned smelter in Slovalco in Slovakia, securing power supply to the plant between 2014 and

2021. Slovalco has an annual production capacity of approximately 174,000 metric tonnes of primary aluminium and consumes

around 2.4 TWh of electricity a year.

• Saudi Arabia sought to persuade Russia on Wednesday to cut oil production substantially with OPEC next year in an attempt to

arrest a decline in the price of crude and prevent another global glut. OPEC meets in Vienna, followed by talks with allies such

as Russia. The producer group’s de facto leader, Saudi Arabia, has indicated a need for steep reductions in output from

January but has come under pressure from U.S. President Donald Trump to push oil prices even lower. Russian Energy

Minister Alexander Novak told reporters he had held a “good” meeting with his Saudi counterpart Khalid al-Falih and that they

would have more talks. Riyadh wants Moscow to contribute at least 250,000-300,000 bpd to the cut but Russia insists the

amount should be only half of that.

International Energy Markets - Review

Global Energy Review – US Markets

• Crude oil prices continued to drop lower through the month of November as prompt month pricing reached levels last seen back in

September 2017. Jan19 WTI crude is currently trading at $50.50/BBL while Brent crude is trading at $58.90/BBL. WTI prices remain

discounted to Brent by over $8.00/BBL. This spread has been shrinking some from a peak over of $11/BBL seen earlier this summer.

Concerns about an oversupplied market continue to dominate news headlines. With record levels of US production and a ramp up of

production coming from both OPEC and Russia in anticipation of US sanctions on Iranian crude not quite materializing the way that

the international community thought they would have crude bears firmly in charge of this market. With WTI prices threatening the

psychological $50/BBL support level, additional moves lower might be hard to come by unless fundamental data on both economic

growth/demand and production continues to be bearish. The market looks oversold from a technical perspective. After dropping by

more than $25/BBL since the start of Q4 2018, prices look like they need to stabilize some before determining if any meaningful moves

lower or higher are in order. While prices in the near-term have been dropping, this is also being felt further out the forward curve.

WTI prices in outer years are in a slight contango to 2019 with cal20 and cal21 both trading at a $54/BBL which is a $3 price premium

to cal19.

• Volatility continues to dominate the U.S. natural gas market. While the December contract rolled off the board at $4.715 per Dth, the

January contract, since assuming the prompt position has seen interday fluctuations in excess of 50 cents per Dth with a trading band

over the past month extending from lows of $3.40 to highs of $4.95 and is currently at $3.30 per Dth. As we enter the heating season

and realize increased pressure on natural gas demand, its impact is largely tempered by continued strength in domestic production.

Record low natural gas storage and below normal temperature forecasts for the coming winter are continuing to prop-up market prices

and driving volatility. As we move through this winter season and into 2019, we expect these market fundamentals to bring support an

upward trend in prices and for the current market backwardation to be replaced by a normal cantango.

United States Energy Markets - Review

Global Energy Review – European Markets

• France: French independent power vendors association ANODE is considering making a legal challenge to a government freeze on

state-owned EDF’s electricity prices. The government suspended increases to fuel taxes for at least six months in response to weeks

of sometimes violent public protests and said it would keep gas and power prices unchanged this winter. ANODE president Fabien

Chone said the proposed freeze on EDF’s regulated tariffs threatens the survival of some of its members. These operators all compete

against EDF, which has an 80 percent share of the retail power market. The government should lower power taxes or introduce

support measures for ANODE’s members.

• In the run-up to the UN climate conference, which began in Katowice in Poland on 2 December, many thousands of people took part in

a demonstration to support accelerating the phasing out of the coal industry. According to figures from organizers, around 36,000

people in Berlin and Cologne took to the streets on Saturday, while the police said there had been about 15,000 participants. The

demonstrators were calling for the capacities of German coal-fired power stations to be halved by 2020. The two-week climate

conference in Katowice will focus on transferring the decisions in the 2015 Paris Agreement into clear rules for implementation and

monitoring, which should ultimately be recorded in a rule book.

• A European Court of Justice (ECJ) advocate-general has cast doubt on Belgium’s decision to extend the life of one of its ageing

nuclear power plants, suggesting that environmental impact assessments may not have been carried out properly. Advocate-General

Juliane Kokott insisted that extending the operating lifespan of two of the Doel plant’s reactors without a proper audit of environmental

concerns means EU rules “have been infringed”. Kokott concluded that the Espoo and Aarhus conventions, international treaties

governing transboundary environmental issues and public participation in decision-making processes, had not been respected.

European Energy Markets - Review

Global Energy Review – Asia/Pac Markets

• Australia: Shanghai-listed Clenergy (Xiamen) Technology Co. Ltd (Clenergy) has signed of a power purchase agreement

(PPA) with Snowy Hydro for the 143.5MW Metz Solar Farm in New South Wales. According to an announcement, the solar

farm will have a generation capacity of 115MWAC(143.5MWDC), and will use single-axis tracking, and solar panels that are

expected to supply electricity to up to 40,000 Australian homes on average. The Metz Solar Farm received Planning Approval

in July 2017, and AEMO and Transgrid grid-connection approvals were secured in July 2018. Clenergy is in the final stages of

awarding EPC and O&M contracts, and it is planned for construction to commence in early 2019, with commercial operation

occurring in Q1 2020.

• Vietnam: Licences have been given to 12 of 16 planned wind power projects. Of the 16 approved wind power projects for

Vietnam’s central province Ninh Thuan, 12 have already received licences, marking a combined capacity of over 748MW and

capital of $978m. There are also 29 planned solar projects, and 12 of these have a total capacity of 968MW and capital of

$1.19b. Moreover, 82MW of wind power from plants in the lake Dam Nai, coastal town of Mui Dinh, and Trung Nam will be

added to the national grid. By 2030, Vietnam expects Ninh Thuan to attract investment in wind power projects with 1,429MW

capacity and in solar power projects with 3,912MW capacity.

• China: China set three-year targets for allowing more wind and solar power onto the power grid after the rapid addition of

panels and windmills forced some electricity distributors to partly block that energy from flowing into their systems. The

curtailment rate for wind power should be held to less than 10 percent next year and to about 5 percent by 2020, from an

estimated 12 percent this year. The rate for solar should be held below 5 percent from 2018 to 2020.

Asia-Pac Energy Markets - Review

Global Energy Review – LATAM Markets

• Brazil: Brazilian antitrust watchdog Cade will begin an investigation that may result in mandatory sales of refineries by state-

controlled oil company Petroleo Brasileiro SA. Cade is analyzing the influence of Petrobras on fuel prices. The company

controls almost 100 percent of refining in the country. Cade and Petrobras did not immediately comment on the matter.

Petrobras has proposed earlier this year to sell a 60 percent stake in four refineries. But a truckers strike that pressured the

company’s pricing policies spooked buyers, and a decision by Supreme Court Justice Ricardo Lewandowski forced the

company to halt the sale process.

• Argentina: Argentina’s state-controlled energy company YPF and Malaysia’s Petronas are forming a joint venture to invest $2.3

billion over the next four years in the country’s Vaca Muerta shale oil fields. State-owned Petronas will have an equal stake in

the project through its subsidiary Petronas E&P Argentina SA, the presidency said in a statement. Petronas has not yet

commented on the announcement. The Belgium-sized Vaca Muerta deposit, located in western Argentina, is regarded as

having the world’s second-largest shale gas and fourth-largest shale oil deposits. This investment will allow to increase YPF’s

petrol production by 30 percent by 2022, which will represent a total increase for Argentina of 15 percent. The companies’

objective is to reach a production equivalent of 60,000 barrels a day by 2022. Total investment could reach $7 billion within 20

years.

• Mexico: Germany-based energy firm DEA Deutsche Erdoel AG has signed an agreement to buy Mexico’s independent oil

company Sierra Oil and Gas. The merger will boost DEA’s presence in Mexico as it looks to expand its portfolio ahead of its

merger with BASF SE’s oil and gas unit Wintershall next year. The acquisition of Sierra will allow DEA to achieve materiality in

the highly strategic and competitive Mexican upstream market. Terms of the deal were not disclosed.

LATAM Energy Markets - Review

Appendix – Commodity Pricing Data

Brent Crude - month ahead contract (US$ per barrel)

Foreign Exchange (Euro/USD)

Appendix – Commodity Pricing Data

Coal CIF ARA 2018 delivery ($/T)

Natural gas prices, “Calendar year 2018” (NBP in £p/therm & TTF in €/MW/h)

Appendix – Commodity Pricing Data

European electricity prices for “Calendar Year 2019” (€/MWh)

Appendix – Commodity Pricing Data

European day ahead electricity prices (€/MWh)

Glossary

Term Definition

Avg Price Industrial Users Latest unit cost for electricity consumed by industrial users as reported by the U.S. Energy Information Administration (EIA). The EIA usually publishes the data 4 months after the month of consumption.

Henry Hub Natural GasThe Henry hub in Erath, Louisiana serves as the pricing point for natural gas futures traded on the New York Mercantile Exchange (NYMEX).

WTI Crude Oil

The reported WTI light crude oil future price is the market determined value of next month’s contract to either buy or sell in multiples of 1,000 barrels West Texas Intermediate or other light sweet crude oil. WTI light crude oil contracts are only executed for physical delivery in relatively few cases but nevertheless they serve as an important pricing mechanism for contracts that are actually executed for physical delivery.

PJM Region Weekday

The Pennsylvania-New Jersey-Maryland (PJM) interconnection functions as a power pool for all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. The PJM power pool is currently the largest competitive wholesale electricity market. The price reported here is the price during weekdays.

Palo Verde Weekday

The Palo Verde switchyard located in Tonopah, Arizona is a key point in the western states power grid and is used as a pricing point for electricity across the southwest United States. The price reported here is the average market price for peak electricity to be consumed on the next day. Peak hours under this contract are from Mon – Sat between 0700 – 2200 hours local time.

Brazilian EthanolThe market price for a next month delivery of 1liter of ethanol at the mill gate in Sao Palo state as calculated by Cepea.

Rotterdam CoalThe market price for a next month delivery of coal in the Amsterdam – Rotterdam – Antwerp (ARA) port area.

GermanyThe market price for one MWh of baseload electricity to be delivered next month as traded on the EPEX Spot Market www.epexspot.com.

FranceThe market price for one MWh of baseload electricity to be delivered next month as traded on the EPEX Spot Market www.epexspot.com.

Glossary

Term Definition

SpainThe market price for one MWh of baseload electricity to be delivered next month as traded on the trading platform belonging to the Operador do Mercado Iberico de Energia (OMIP).

SwissThe market price for one MWh of baseload electricity to be delivered next month as traded on the European Energy Exchange (EEX).

UKThe market price for one MWh of baseload electricity to be delivered next EFA month as traded on the Intercontinental Exchange (ICE). EFA month stands for the specific calendar in use under the Electricity Forwards Agreement that breaks up the year in equal blocks of 4 and 5 weeks so as to simplify trading.

TTFThe Title Transfer Facility (TTF) is a virtual hub that serves as a pricing point for natural gas contracts within the Dutch gas network. The actual contracts are traded on the European Energy Derivatives Exchange (ENDEX).

NBPThe National Balancing Point (NBP) is a virtual hub that serves as a pricing point for natural gas contracts within the United Kingdown. The actual contracts are traded on the Intercontinental exchange (ICE).

Singapore Fuel OilThe market price for Free on Board (FOB) 180 Centistoke (CST) fuel oil in Singapore port to be delivered next month.

Japan LNGThe reported price for LNG in Japan is derived from the price of West Texas Intermediate (WTI) crude oil by means of an index formula and is reported in US Dollar per decatherm.

Queensland Baseload PowerThe market price for one MWh of baseload electricity to be delivered next month in Queensland as traded on the Australian Securities Exchange (ASX).

Brent Crude OilBrent crude oil is a combination of light crude oil from 15 different oil fields located in the North Sea. Due to the high quality of Brent crude, it is ideal for making gasoline and middle distillates. As such, Brent crude forms the pricing benchmark in Europe and Africa.

Glossary

Term Definition

Foreign ExchangeThe blue line in the graph presents the daily exchange rates Euro to USD while the red line represents the moving average over the last 14 trading days.

Coal CIF ARA 20XX DeliveryCoal is an important input fuel for electricity generation. The coal price reported in appendix 3 is inclusive of commodity Cost, Insurance and Freight (CIF) from its origin to the ports of Amsterdam – Rotterdam –Antwerp (ARA) to be delivered next month.

Natural Gas Price for Calendar 20XX

The featured contracts in this graph are for the delivery of natural gas in the UK (NBP), Dutch (TTF) and German (EEX) markets in the next Calendar year. The benefit of the annual contract is that the buyer has an average price throughout the year rather than individual prices for each month that are priced according to market conditions and can show great variances between winter and summer prices. For further information on the specific country contracts, please refer to the glossary for the world report.

European Electricity Prices for Calendar Year 20XX

The featured contracts represent the current market price for one MWh of baseload electricity to be delivered next calendar year (except UK) as traded on each of the respective exchanges mentioned as source. The electricity market in the UK features the season contract as its longest contract. As a result, the reported market price is the average of the nearest summer and winter contracts.

European Day Ahead Electricity Prices

Next to future contracts, each electricity exchange also features a day ahead contract. The day ahead contracts are characterized by greater volatility than the monthly and longer period future contracts as they are more susceptible to actual supply and demand on the day as well as the other factors influencing the longer contract prices.

Confidential

This presentation and the information contained herein is confidential and

intended for NUS Consulting Group clients.

The material contained herein represents the opinion and views of NUS Consulting

Group and is provided to discuss general market activity, industry and sector

trends, as well as other broad-based economic, market and political conditions.

This information should not be construed as research or investment/purchasing

advice. Persons responsible for the purchase of energy for an organisation must

consider their organisation’s own objectives, risk tolerance and market forecast

when undertaking energy purchasing decisions.

The circulation or distribution of this presentation or the information contained

herein to persons other than the Intended Entity or its employees is strictly

prohibited